WHAT: Segregated Witness (SegWit) proposed and implemented under Bitcoin Improvement Proposal BIP141 on Aug. 23, 2017. It essentially splits a Bitcoin transaction into two segments, removing the unlocking signature (“witness”) from the original data.

PRO: Proponents believe that increasing the blocksize will eventually increase mining centralization so SegWit would enable an overlay network of micropayment channels (the Lightning Network) which keeps the blocksize small (1MB) but avoids scaling issues by enabling Bitcoin transactions to occur “off chain”.

CON: Others believe that offloading data from the original Bitcoin blockchain minus a blocksize increase is moving away from the fundamental operation of the Bitcoin protocol, and is essentially admitting that the blockchain itself can’t function as intended.

From this perspective, a piece of the community hard forked into a new chain called Bitcoin Cash in 2017. Bitcoin Cash (and later Bitcoin SV) are essentially legacy Bitcoin before SegWit, and their high-level scaling strategy is simply to increase the blocksize and keep all transaction data on-chain.


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